Simi Valley is moving toward eliminating its business tax for the 7,700 businesses in the city with gross annual receipts of less than $300,000.

They account for 78 percent of the city's businesses, according to Administrative Services Director James Purtee. The city's average annual business tax per business is $167.

At its meeting Monday night, the City Council directed Purtee to prepare a detailed cost analysis of the proposal for its consideration at a future meeting, likely next month.

While Purtee recommended the tax for the 7,700 businesses be kept until 2013, Mayor Bob Huber said he wants to see it eliminated in 2012. Business tax notices go out in January, and the tax is due by April 30.

"The backbone of our community and every community across this country is small business," Huber said. "Where I'm coming from is I want it right now.

"There's an adage in business — it takes money to make money — and if we can help these people get through these hard times, it's going to make us the money back in spades manyfold," he said.

In response to a recommendation from the city's Ad Hoc Fiscal Advisory Committee to eliminate the business tax, the council in August ordered a review of the matter.

Purtee's analysis found the 78 percent of Simi Valley businesses that report gross annual receipts of less than $300,000 generate 14 percent of the city's business tax revenue, or about $219,000. The city spends about $24.53 per business in hard costs, including printing, mailings and hardware/software maintenance, to implement and renew the business tax, Purtee wrote in a memo to the council.

Thus, "The city spends approximately $189,000 in hard costs to generate $219,000 in business tax revenues," he wrote.

The council can provide tax relief to the 7,700 small businesses with a 0.4 percent impact on the city's general fund, the memo states.

Simi Valley's average business tax per business historically has been the second-highest in Ventura County, behind Oxnard's, Purtee wrote.

"However, when other fees impacting businesses are taken into consideration, the city's business tax remains competitive with that of other communities," he told the council.

For instance, while Glendale eliminated its business tax in 2000, it charges a 7 percent utility user tax that costs businesses $8.5 million a year, Purtee wrote. Simi has no such utility user tax.

Ad hoc committee member Doug Crosse, speaking on behalf of the Simi Valley/Moorpark Tea Party, told the council the committee recommended eliminating all city business taxes because "we are in a battle to attract and retain businesses in Simi Valley."

In a tough economy, eliminating the tax for businesses with gross receipts under $300,000 a year "would be looked at as a business-friendly move on behalf of the city," Crosse said.

Simi Valley Chamber of Commerce CEO Leigh Nixon agreed.

"Especially in today's economy, any break that businesses can catch is a good thing," she said Wednesday.